Pork Export Market is Solid, but There’s Room to Grow

Jim Herlihy

Mon, 2010-09-20 11:51

The international marketplace has been the primary growth engine for the U.S. pork industry in recent years. The trend continues as this year’s export levels flirt with all-time highs and producers are seeing a solid return on every hog sold.

The international marketplace has been the primary growth engine for the U.S. pork industry in recent years. The trend continues as this year’s export levels flirt with all-time highs and producers are seeing a solid return on every hog sold.

Through the first seven months of 2010, exports stand at a robust 2.4 billion pounds valued at $2.74 billion. That’s a 2% jump in volume over the same period in 2009, while the value is up a solid 8%. This represents a measurable return to producers. This year, exports have added $44.37/head, nearly $5/head more than last year.

Even with nearly 24% of all U.S. pork going into the international market, Philip Seng, president and CEO of the U.S. Meat Export Federation (USMEF), feels there is room for pork exports to grow.

“Even with the positive growth in pork exports, there are many market niches that have not been fully explored and exploited,” Seng says. “For example, the U.S. pork industry should not be content to be the leading pork exporter to either Mexico or Japan, our two largest markets. We want to be the leader in every segment of those markets, and we continue to explore creative partnerships and new products to expand our share.”

Mexico is a prime example of a market where the United States is dominant, but opportunities remain. Through the first seven months of 2010, the United States has exported 311,206 metric tons (686 million pounds) of pork valued at $560 million – an 8% increase in volume and a 31% jump in value over 2009. U.S. market share in Mexico is an impressive 92%.

Similarly, Japan has purchased 259,947 metric tons (573 million pounds) of pork valued at nearly $969 million. More than 35% of the value of all U.S. pork exports goes to Japan, and the United States holds a solid 45% of the import market share.

But that market share cannot be taken for granted. While U.S. exports to Japan remain steady this year compared to 2009, market share has dipped from 47%, while exports from Canada and the European Union, two key competitors, are up 14% and 11%, respectively. Canada and Mexico (an emerging competitor, already benefiting from a free trade agreement with Japan) each recently opened full-time pork industry offices in Tokyo to try to further capitalize on what is the No. 1 value market in the world for pork products.

Mexico is a price-sensitive market, and the government recently imposed a 5% tariff on U.S. pork products as a byproduct of a North American Free Trade Agreement (NAFTA)-related trucking dispute. As a result, Canada will have a price advantage.

“Our goal is to build long-term relationships with importers and retailers and earn the confidence of consumers when they see the U.S. pork emblem on packages,” Seng notes. “However, we must understand that the pork markets that are attractive to us also are attractive to our competitors. In the case of Japan, where prices and profits are higher, there are more than 20 nations competing for a place on consumers’ plates.”

For that reason, USMEF is aggressively looking to develop new opportunities for U.S. pork in Japan, Mexico and other key markets around the globe. Recently, USMEF pork marketing directors representing Asia, Europe and North America met to explore and develop new ideas and new markets for U.S. pork. These ideas will be presented to USMEF pork funding sources this fall for consideration and potential implementation.

“Even when a market appears to be saturated, there often are niche markets that have not been explored,” explains Dan Halstrom, USMEF senior vice president. “In the case of Japan, there are certain food-service categories that present opportunities, and the processed pork sector has been dominated by some of our competitors.”

While the United States is the leading pork exporter to Japan, the reality is that U.S. pork only represents about 17% of Japan’s total pork purchases (including domestic pork), which leaves significant room for growth.

In the case of Mexico, U.S. pork is heavily represented in the processing sector, but there is room for growth in both the foodservice and retail settings. And two-thirds of Mexico’s pork is home-grown, which could create opportunities for high-quality U.S. pork.

“The international shopping cart represents a great opportunity for the U.S. pork industry. Currently, we are exporting 24% of all pork and pork variety meat produced in the United States, and we see that number growing as the world’s population grows and as consumers in those countries get a chance to experience the taste of top-quality, grain-fed U.S. pork,” Seng notes.

U.S. pork also benefits from the desire of USMEF’s international partners to both import and market U.S. pork. In one example from earlier this summer, a Japanese sauce company, Ebara Foods, funded a $3 million ad campaign to promote its sauces for use on several products, including U.S. pork back ribs.

“The opportunity for USMEF to blend Pork Checkoff dollars with third-party contributions like Ebara’s, as well as USDA Market Access Program (MAP) funds and the support of U.S. pork exporters, is a powerful tool,” Seng adds. “That’s a recipe for a great return on investment for pork producers. It’s our job, and the job of the team of meat industry professionals we have stationed in our international offices, to keep up the momentum and find and fill these market niches before our competitors do.”